What Is a Power of Attorney?

There's a common assumption that estate planning is mostly about what happens after you're gone. But some of the most important documents in your plan are designed for while you're still here.

A power of attorney is one of them.

It addresses a question most people don't want to sit with: what happens to your finances, your bills, your accounts, and your everyday decisions if you're temporarily or permanently unable to manage them yourself? An accident. A serious illness. A surgery with a long recovery. These things happen, and having a plan in place before they do makes all the difference for the people who would otherwise have to figure it out without guidance.

What Is a Power of Attorney?

A power of attorney is a legal document that gives another person the authority to act on your behalf in financial and legal matters.

The person you name is called your agent (sometimes referred to as your attorney-in-fact). The authority you give them can be broad or narrow, temporary or ongoing. It can cover everything from paying your bills and managing your bank accounts to filing your taxes, handling real estate transactions, or making financial decisions while you're traveling or incapacitated.

You remain in control of your own affairs for as long as you're able. The power of attorney only activates when it's needed, or when you choose to use it.

The Different Types

Not all powers of attorney work the same way. Understanding the main types helps you choose what fits your situation.

A general power of attorney gives your agent broad authority over your financial and legal affairs. It's often used for a specific period of time, such as when you'll be abroad and need someone to handle things while you're away. In most states, it automatically ends if you become incapacitated.

A durable power of attorney works similarly, but it remains in effect even if you become mentally or physically incapacitated. This is the type most commonly included in estate plans, because it's designed for exactly the situations where you need it most.

A limited (or special) power of attorney grants authority for one specific task or transaction. For example, authorizing someone to close a real estate deal on your behalf while you're out of the country.

A springing power of attorney only takes effect under specific conditions, usually when a doctor certifies that you are no longer able to make decisions for yourself. It's inactive until that moment arrives.

For most estate plans, a durable power of attorney is the most practical and protective option.

Who Should You Name as Your Agent?

Your agent will have real authority over your financial life if the document is ever activated. This is not a decision to make lightly.

The right person is someone who:

• Is trustworthy and honest, without question
• Is organized and comfortable handling financial matters
• Understands your values and will act in your best interest
• Is available and willing to take on the responsibility

Many people name a spouse, an adult child, or a close trusted friend. You can also name a professional, such as an attorney or a financial advisor, particularly if your finances are complex or if family dynamics make a neutral party the better choice.

It's also worth naming an alternate agent as a backup, in case your first choice is unavailable or unable to serve when needed.

Have a direct conversation with whoever you choose. Make sure they understand what the role involves and are genuinely prepared to take it on.

What Can an Agent Do?

The scope of authority depends on what you specify in the document. A durable power of attorney typically allows your agent to:

• Access and manage your bank accounts
• Pay your bills and ongoing expenses
• File your tax returns
• Manage or sell real estate on your behalf
• Handle investment accounts
• Apply for government benefits on your behalf
• Manage business interests if applicable

You can include or exclude specific powers depending on your situation. A well-drafted document is clear about what your agent can and cannot do.

What a Power of Attorney Does Not Cover

It's worth knowing the limits as well.

A power of attorney does not give your agent authority over your healthcare decisions. That's handled by your healthcare directive and the healthcare proxy you name within it.

A power of attorney also ends at your death. After you pass, your executor takes over. The two roles are separate, and it's common for people to name different individuals for each.

Finally, a power of attorney cannot be used to change your will or override decisions you've already documented elsewhere in your estate plan.

Why Having One Matters

Without a power of attorney, if you become incapacitated, your family may have no legal authority to manage your finances, even for basic things like paying your mortgage or accessing your accounts to cover medical bills.

In that situation, a family member may need to go to court to be appointed your legal guardian or conservator. That process takes time, costs money, and happens during an already difficult period.

A power of attorney keeps that from being necessary. It's a relatively simple document that gives your family a clear path forward when things get complicated.

How to Create One

Power of attorney laws vary by state. The required language, signing process, and witnessing or notarization requirements are different depending on where you live.

HeirLight guides you through creating your power of attorney as part of a complete estate plan, in plain English and at your own pace. Once it's signed and properly executed according to your state's rules, make sure your agent has a copy and knows where the original is stored.

Ready to Put Your Plan in Writing?

A power of attorney is one of the three core documents in a complete estate plan. HeirLight helps you work through all of it: your will, healthcare directive, and power of attorney, in one guided experience built for people who want clarity without the overwhelm.

The questions are in plain English. The pace is yours. And you can start for $0.

Once you're done, you'll print and sign your documents according to your state's rules, and the people you care about will have something clear to follow.

If this has been sitting on your to-do list for a while, this is a simple way to finally move it forward.

Important: HeirLight is not a law firm and does not provide legal, tax, or financial advice. Our tools are educational and self-help in nature. For complex situations or legal advice about your specific circumstances, you should consult a licensed attorney.

Sources

The information in this article is based on general estate planning principles and publicly available legal resources. For guidance specific to your state or situation, we recommend speaking with a licensed estate planning attorney.

• Cornell Law School, Legal Information Institute - Power of Attorney - law.cornell.edu/wex/power_of_attorney
• Cornell Law School, Legal Information Institute - Durable Power of Attorney - law.cornell.edu/wex/durable_power_of_attorney
• American Bar Association - Power of Attorney - americanbar.org
• AARP - What Is Power of Attorney? - aarp.org
• National Institute on Aging - Getting Your Affairs in Order - nia.nih.gov